WILLMAR -- Willmar Mayor Les Heitke is proposing a budget for 2011 of $25,694,742, up 15.8 percent from the 2010 budget of $22,186,858. The increase is due mainly to debt incurred for the construction of the new wastewater treatment project, he said.
Heitke presented the budget Monday evening to the City Council's Finance Committee. Heitke said it's the mayor's duty to present the budget to the committee at this time of the year. He said the committee will study it, make changes, and have a final recommendation for the council to ratify during the first meeting in December.
Service charges, which comprise the largest source of revenue from among the city's 15 revenue sources in 2011, are pegged at $7,992,939 or 31.1 percent of all revenue. The amount is due primarily to rates charged by the city for the wastewater plant.
The second largest revenue source is Local Government Aid at $4,482,275 or 17.4 percent of all revenue. Heitke said LGA is vitally important. He said the state unalloted $1.2 million in LGA to Willmar from 2008 through 2010.
"If the city did not have Local Government Aid, we would have to find the revenue from other sources, primarily property taxes.
We work hard ... to safeguard LGA for all communities,'' Heitke said.
The third-largest revenue source is the proposed property tax levy of $3,924,764 or 15.3 percent of all revenue. The proposed levy is up 6.9 percent or $256,059 from the 2010 levy of $3,668,705. Heitke said the amount leaves the city with about $65,000 that officials hope will be handled by an increased tax base and by increased valuation of property.
Other revenue sources include $1,891,708 in intergovernmental transfer from the Willmar Municipal Utilities. Heitke said the city must protect the transfer payment. "If we lose control of that, it has to come from someplace else,'' he said.
Heitke said budget preparation has been challenging because of the state of the economy and the history of the state's unallotment of aid to cities and counties and shifting school aid to balance the budget.
He said the federal government is making $240 million available to Minnesota and Gov. Tim Pawlenty must decide to either accept or reject the money. The amount might be just enough to carry the state forward to meet its financial obligation for this year, Heitke said. If Pawlenty accepts, the city might be assured of no unallotments this year, said Heitke.
However, Heitke said the council has directed City Administrator Michael Schmit and his staff to prepare a three-phase budget reduction of $500,000, $750,000 or $1 million if LGA is unalloted or finances slip strongly.
If the budget is cut, Heitke said, large capital outlay expenditures such as $252,943 for a road grader, $195,000 for a loader and $175,000 for a bucket truck will likely disappear. "We have been delaying the purchase of these for a while and again every year they just get more expensive or the maintenance on the old ones gets more expensive,'' he said.
Finance Committee Chairman Denis Anderson said one committee task next Monday will be discussing the levy. The committee will recommend a levy amount to the council on Sept. 7 in time for the levy to be certified to the county auditor by Sept. 15.
The remaining weeks will be spent examining the budget.
"Our plan will be what we've done in the past with breaking down and looking at revenues and expenses and making recommendations as we move forward,'' he said.